Geithner = Megabank lackey

Two weeks ago, I censored myself in my blog. I originally typed that Treasury Secretary Timothy Geithner was a long-time financial industry “lackey.” I hit the Backspace button and replaced it with “insider.”

Well, I want to uncensor myself after reading in The New York Times that “An examination of Mr. Geithner’s five years as president of the New York Fed… shows that he forged unusually close relationships with executives of Wall Street’s giant financial institutions. His actions, as a regulator and later a bailout king, often aligned with the industry’s interests and desires.”

The article begins with this astonishing story:

Last June, with a financial hurricane gathering force, Treasury Secretary Henry M. Paulson Jr. convened the nation’s economic stewards for a brainstorming session. What emergency powers might the government want at its disposal to confront the crisis? he asked.

Timothy F. Geithner… stunned the group with the audacity of his answer. He proposed asking Congress to give the president broad power to guarantee all the debt in the banking system, according to two participants, including Michele Davis, then an assistant Treasury secretary.

It documents Geithner’s cozy relationship with the megabanks he was “regulating”:

He ate lunch with senior executives from Citigroup, Goldman Sachs and Morgan Stanley at the Four Seasons restaurant or in their corporate dining rooms. He attended casual dinners at the homes of executives like Jamie Dimon, a member of the New York Fed board and the chief of JPMorgan Chase.

Mr. Geithner was particularly close to executives of Citigroup, the largest bank under his supervision. Robert E. Rubin, a senior Citi executive and a former Treasury secretary, was Mr. Geithner’s mentor from his years in the Clinton administration, and the two kept in close touch in New York.

Mr. Geithner met frequently with Sanford I. Weill, one of Citi’s largest individual shareholders and its former chairman.

No wonder the Citibank/Goldman power brokers who gave so “generously” to the Obama campaign and run economic and finance policy in the Obama White House put Geithner in charge of the Treasury! Geithner has since given them everything they could possibly have hoped for:

The government has in many ways embraced his blue-sky prescription. Step by step, through an array of new programs, the Federal Reserve and Treasury have assumed an unprecedented role in the banking system, using unprecedented amounts of taxpayer money, to try to save the nation’s financiers from their own mistakes.

And more often than not, Mr. Geithner has been a leading architect of those bailouts, the activist at the head of the pack. He was the federal regulator most willing to “push the envelope,” said H. Rodgin Cohen, a prominent Wall Street lawyer who spoke frequently with Mr. Geithner.

…[L]awmakers, economists and even former Federal Reserve colleagues — say that the bailout Mr. Geithner has played such a central role in fashioning is overly generous to the financial industry at taxpayer expense.

As Colonel Kurtz (Marlon Brando) says in Apocalypse Now, “You’re an errand boy sent by grocery clerks to collect a bill.” Geithner is the errand boy of our current financial apocalypse.

Posted by James on Monday, April 27, 2009